Global

A Side-by-side Analysis of One Horizon Group, Inc. (OHGI) and Unisys Corporation (UIS)

Unisys Corporation (NYSE:UIS), on the other hand, is up 138.65% year to date as of 09/11/2018. It currently trades at $19.45 and has returned 1.57% during the past week.

One Horizon Group, Inc. (NASDAQ:OHGI) and Unisys Corporation (NYSE:UIS) are the two most active stocks in the Application Software industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.

Growth

Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, UIS is expected to grow at a 9.00% annual rate. All else equal, UIS’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. EBITDA margin of 8.48% for Unisys Corporation (UIS).

Cash Flow



The value of a stock is simply the present value of its future free cash flows. OHGI’s free cash flow (“FCF”) per share for the trailing twelve months was -0.02. Comparatively, UIS’s free cash flow per share was -0.67. On a percent-of-sales basis, OHGI’s free cash flow was -0.1% while UIS converted -1.25% of its revenues into cash flow. This means that, for a given level of sales, OHGI is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. OHGI has a current ratio of 3.70 compared to 1.50 for UIS. This means that OHGI can more easily cover its most immediate liabilities over the next twelve months.

Valuation

OHGI trades at a P/B of 0.59, and a P/S of 10.81, compared to a forward P/E of 10.75, and a P/S of 0.36 for UIS. OHGI is the cheaper of the two stocks on an earnings basis but is expensive in terms of P/B and P/S ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Analyst Price Targets and Opinions

A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. OHGI is currently priced at a -95.63% to its one-year price target of 5.03. Comparatively, UIS is 34.14% relative to its price target of 14.50. This suggests that OHGI is the better investment over the next year.

Risk and Volatility

Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. OHGI has a beta of 2.58 and UIS’s beta is 1.48. UIS’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment




Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment. OHGI has a short ratio of 0.81 compared to a short interest of 8.19 for UIS. This implies that the market is currently less bearish on the outlook for OHGI.

Summary

Unisys Corporation (NYSE:UIS) beats One Horizon Group, Inc. (NASDAQ:OHGI) on a total of 7 of the 14 factors compared between the two stocks. UIS has higher cash flow per share, is more profitable, generates a higher return on investment and has lower financial risk. In terms of valuation, UIS is the cheaper of the two stocks on book value and sales basis, Finally, LTS has better sentiment signals based on short interest.

Previous ArticleNext Article

Related Post

Should You Buy CEMEX, S.A.B. de C.V. (CX) or North... CEMEX, S.A.B. de C.V. (NYSE:CX) shares are down more than -4.80% this year and recently decreased -3.12% or -$0.23 to settle at $7.14. Northern Oil an...
Should You Buy TherapeuticsMD, Inc. (TXMD) or Sabr... TherapeuticsMD, Inc. (NASDAQ:TXMD) shares are down more than -11.42% this year and recently increased 1.90% or $0.1 to settle at $5.35. Sabre Corporat...
Yext, Inc. (YEXT) vs. Baozun Inc. (BZUN): Which is... Yext, Inc. (NYSE:YEXT) shares are up more than 110.31% this year and recently decreased -5.42% or -$1.45 to settle at $25.30. Baozun Inc. (NASDAQ:BZUN...
Critical Comparison: Walgreens Boots Alliance, Inc... Walgreens Boots Alliance, Inc. (NASDAQ:WBA) shares are down more than -10.59% this year and recently decreased -1.86% or -$1.23 to settle at $64.93. N...
Comparing Xcel Energy Inc. (XEL) and Tata Motors L... Xcel Energy Inc. (NASDAQ:XEL) shares are down more than -5.18% this year and recently decreased -0.52% or -$0.24 to settle at $45.62. Tata Motors Limi...